End Of Credit
Crunch: What Will It Take?
It is now well established
that the credit crunch is here to stay for at least a few years to come, but there
is another question many people are starting to ask. What exactly does it take
to pull out of economic conditions such as these? Though
we can always hold out hope that the end of credit crunch stress is fast at hand
with a new government taking office, the fact is we likely have at least a couple
years to go. It took years for the subprime lending hay day to show it's true
ramifications and it is going to be years for the world to get away from those
consequences as well. A new government promising to intervene could eventually
bring the end of credit crunch hits, but it is not likely to happen as quickly
as many people believe. Consider the fourteen year credit
crunch in Japan as an example. They experienced much the same problems that are
affecting our country right now, and it took their government a very long time
to find a way out of the mess. Despite massive stimulus packages, public works
projects, and money being pumped into their banking system, it took over fourteen
years for their economy to pull out of the credit crunch. That
does not mean that the U.S. will be stuck in this crunch for fourteen years like
Japan was, but it shows the enormity of the situation and demonstrates how even
with government intervention the end of credit crunch economics is not likely
to happen overnight just because we have a new president. However, the speed in
which we recover can very well rest on the actions taken by the new government
coming into power. Of course that means not just the new president, but the congress
as well since they are behind much of the decision making that goes through of
this nature. So far the US government has given one tax
rebate intended to stimulate spending amongst the people and has given the banks
billions of dollars to avoid their collapse. What we have to show for it so far
is a quarter of a trillion dollar deficit and even more industries with their
hands out for assistance. The real estate industry has been struggling for a while
now, and the automotive industry and airlines are under consideration for help
right now. Where the end to government assistance and a soaring deficit may end
is yet to be seen and will largely depend on the stance our new government takes
once in office. Until the end of credit crunch hints do
arrive, people are settling into their homes and trying to keep their finances
in order as much as possible. It is becoming increasingly hard to get a loan for
any purpose unless you have a nice sized bank account and top level credit ratings.
To get a home mortgage can be especially tricky as banks are not willing to take
on borrowers with the slightest signs of risk. Where the
crunch economics will fall and how soon it will occur cannot be predicted, though
many are already debating the intentions of the new government and trying to guess
where we may be in months and years ahead. How much government intervention is
good for a credit crunch and when intervention could actually prolong the length
of the crisis is hotly debated around the world. Yet, for all the arguing no one
can say for sure when the end of credit crunch turmoil will occur.
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